Macenstein

Posted by Dr. Macenstein

Writing for PBS, Robert Cringely proposes a theory so absurd it (almost) actually makes sense. In his latest article, Mr. Cringely submits that Apple would benefit greatly by purchasing video “super chain” Blockbuster Video.

Now, before you begin debating whether or not Cringely is on crack, let’s first debate the validity of his argument. Cringely envisions a future where customers would take their video iPods to the local Blockbuster Video store, and simply download one of the thousands of available titles, either as a rental or as a full blown purchase. In Cringely’s future, the iPod has evolved into a full-fledged video playback device, possibly one that interfaces with an Apple set top box and Front Row software for playback on home theaters.

Why would Apple entertain such a notion? Well for one thing, while broadband availability is certainly growing at a fast pace, the bandwidth needed to download a full-resolution movie in a reasonable amount of time is still out of reach of most consumers. Users could run out to their local Blockbusters, hook their iPod up to the Blockbuster’s xServes, download their movie, and be home long before they could have downloaded the movie over a DSL connection.

This new distribution method would also benefit Apple by putting iPods in the hands of people who may not normally consider buying one, and by tapping into an already established distribution chain.

This deal certainly benefits Blockbuster Video as well. The chain is being beaten handily by online rival Netflix whose virtual business model has relatively little overhead when compared to Blockbuster’s thousands of physical locations. However, Blockbuster’s huge number of stores could be turned from a minus to a plus for both companies if it becomes an outlet for Apple video downloads.

Now, of course there are a few reasons why this would NOT be a great idea for Apple that Mr. Cringely omits. First, as of the moment, the iPod is incapable to playing back full-res video. While the next version of the iPod is very likely to include a larger screen and also likely to be able to display higher resolution video than the current 320×240 iPod standard, playing back full resolution video takes a good deal of processing power to decode in real time. It may take yet another revision before the iPod can display DVD quality video.

Second, there is not yet an Apple set-top box. This rumored device could certainly become a reality any day now, but even if it is released tomorrow, odds are the masses will not want to spend an (estimated) $300-$400 or so for a device that hooks to their $400-$500 iPod just to playback videos and music tied to a specific DRM scheme.

Still, this is a very interesting theory, and certainly makes more sense than the rumors of Apple buying Nintendo to gain access to its Wi-Fi network. While I certainly doubt we will hear an announcement of an Apple takeover of Blockbuster Video come the next Apple event (April 1st?), I would not rule out the possibility of a partnership announcement.